How Likely Is It You’ll Outlive Your Investment Portfolio?


This week’s AAII Weekly Digest highlights these “must-read” AAII articles:

Retirees should only risk the savings they don’t need; young investors should allocate as much to stocks as their risk tolerance allows. William “Bill” Bernstein is a neurologist, co-founder of the investment firm Efficient Frontier Advisors and the author of several books. This discussion covers his approach to investing, which includes avoiding the risk of running out money.

In a defined-contribution pension arrangement (e.g., a 401(k) plan), individual retirees are subject to both investment risk (i.e., uncertainty about what their investment returns will be) and longevity risk (uncertainty about how long they will live). This article explores the question: Which of these risks is bigger?

Until recently, a portfolio allocation that evolved over time (meaning followed a “glide path”) to become more conservative after retirement was the widely accepted standard approach. However, recent studies suggest the opposite: that retirees should increase their equity allocations over time. These relatively novel findings have left many investors and advisers unsure about how to build optimal retirement portfolios.

Charles Ellis pens an investment letter to his grandchildren to share what he learned through 50 years of experience.

 Our Member Question for this week is:

If your portfolio results failed to meet your expectations over a two-year time frame and your personal circumstances remained similar to those of today, which would you do?


Vote to answer this week’s Special Question: Knowing what you know today about investing, what is the one thing you wish you had done differently through the years when building your portfolio?

Last Week’s Results:


Last week we asked our readers whether they were currently invested in actively managed ETFs or of they would consider investing in them. Visit the AAII Blog for a summary of the responses.


A Lifetime Investment Strategy

Authored by the chairman and founder of AAII, this valuable publication shows you how you can outperform professional money managers and the market over the long run. It’s not available in bookstores but is free to all members of AAII.


The AAII Weekly Digest is one of the many benefits of AAII membership. To learn more, consider a risk-free 30-day Trial AAII Membership to start becoming an effective manager of your own assets.


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